Disappointed with ITC demerger, avoiding metal stocks: Pankaj Pandey

economictimes.indiatimes.com:

Pankaj Pandey, Head Research, ICICIdirect.com, says the ITC demerger was a bit of a disappointment largely because a vertical split would have been a lot better from an investor perspective. “I do not think we will be raising our target prices because of that bit of a let-down in terms of expectation.”What are you making of the ITC demerger? Are you disappointed by the complicated structure or the fact that the news is finally out and that is something to watch out for?This demerger is a bit of a disappointment largely because a vertical split would have been a lot better from an investor perspective. But from a per share perspective, the hotel business was contributing over Rs 25.

So probably from a number perspective, it does not really sort of matter much. But overall, it is a bit of a disappointment because ITC is still holding 40% of the demerged business. It is very much possible going forward that this business will require money and capital allocation could remain a challenge which has been there for a good period of time.

So from that perspective, yes it is a bit of a disappointment and I do not think we will be raising our target prices because of that bit of a let-down in terms of expectation.What about the outlook when it comes to the entire metal sector because we have seen a bit of a decline setting in? What is the outlook on metal stocks?On metals, we still do not have a very clear trajectory in terms of how China will perform. So while the volume growth is good, especially on the domestic side whether it is for Tata Steel or for JSW Steel, the pricing is a sort of a challenge. That is where things are not yet clear.